Think carefully.

Think carefully.

There is low consumer demand; production capacity is unused; prices are stable or are falling; busi-ness profits are low; unemployment is high; and business confidence is low. Is this:
A . Recovery
B . Recession
C . Boom
D . Depression

View Answer

Answer: D

Explanation:

This is a description of a depression – the worst of all economic situations, which governments will do almost anything to avoid.

A recession is a decline in the performance of the economic factors mentioned (unemployment ris-es), and technically in the UK, a recession would be two successive quarters of decline (reducing

economic activity / reducing GDP). A recovery is coming out of recession, and a boom is when the economy is in the opposite state to the depression shown in the question. Generally, an economy’s behaviour is cyclical.